Influence activities and favoritism in subjective Performance Evaluation: Evidence from Chinese state-owned enterprises

Fei Du, Guliang Tang, S. Mark Young

Research output: Contribution to journalArticlepeer-review

Abstract

This study addresses the two-way process in which a subordinate and a superior engage in influence activities (bottom-up) and favoritism (top-down) in subjective Performance Evaluation. The research context is the Chinese government's evaluation of Chinese state-owned enterprises (SOEs) by the State-Owned Assets Supervision and Administration Commission of China (SASAC). We analyze archival records of the government's evaluation scores, score adjustments, and evaluation ratings given to 63 SOEs between 2005 and 2007. These analyses are also interpreted based on insights gained from in-depth field interviews with SASAC officials and chief financial officers (CFOs) of SOEs. Results indicate that the political connection of SOE CFOs, the geographic proximity of SOE headquarters to the SASAC central office, and political rank of the firm affect the SASAC's evaluations.

Original languageEnglish (US)
Pages (from-to)1555-1588
Number of pages34
JournalAccounting Review
Volume87
Issue number5
DOIs
StatePublished - Sep 1 2012
Externally publishedYes

Keywords

  • Chinese state-owned enterprises (SOEs)
  • Favoritism
  • Geographic proximity
  • Influence activities
  • Political connections
  • State-owned asset supervision and administration council (SASAC)
  • Subjective Performance Evaluation

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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